Changing face of savings spotlight on current accounts

There was a time when consumers looking to put money aside were spoilt for choice, but in the current climate of low Bank of England base rate and high rate of inflation, savers will struggle to generate any decent returns. Savers may be tempted to keep their money in a high paying current account, but moneysupermarket.com warns that savers will get more from their monthly income by using a high paying easy access savings account.

For those who can not afford to lock their money away easy access accounts are a good place to save, with the top account, The AA Internet Extra account earning 2.8 per cent AER. While there are a few higher paying current accounts, such as the market leading Preferred In-Credit account from Santander offering five per cent interest on balances up to £2,500, consumers could be fooled into leaving their money languishing in their current account, unaware that this is not the best savings option.

Current accounts are designed to be transactional, meaning savers would have to use this account for everyday use and pay in a monthly amount (for example £1500 on the Santander account), and so the likelihood of being able to earn the five per cent on the full £2,500 is extremely hard. The T's&C's are also complicated, making it very difficult to use as a pure savings vehicle.

Kevin Mountford, head of savings at moneysupermarket.com, said: "Consumers may be fooled by headline rates, but a further understanding of saving products is needed to ensure savers get the best deal. Unfortunately saving rates are far from the peak we saw only a couple of years ago and may not increase for some time, so consumers will need to be more savvy with their money than ever to find the best rates available, which may mean using their current account and savings account carefully.

"Those who can't afford to lock their money away but want the most value from their savings should opt for an easy access account. Even with savings rates at an all time low, consumers can still find an easy access account with decent rates. Consumers should also ensure that their current account works best for them as several of the leading current accounts offer excellent returns, including the Halifax £5 per month reward account. This combined with the top paying easy access account, will certainly give you the most bang for your buck.

"The message here is simple, consumers need to be aware of their rates and ensure their money is working as hard as possible for them. We urge savers to check their existing rates on their savings and their current accounts and switch to a higher rate where possible"